Friday, February 27, 2009

Consumerism

Very much related to the credit crunch and global economic downturn is the problem of consumerism. On the one hand, a return to rampant consumption might be just the thing to turn economies around today. On the other hand, the day of reckoning has finally come after too many years of rampant and every-growing consumption.

A large part of today's mass consumption has been funded by debt. Consumer debt is at least one element of the current credit crunch. I heard on the radio today that the amount of consumer debt in the United States is equal to 100% of the country's entire GDP.

To put this into perspective, that number was at about 50% as of year 2000--a more or less manageable ratio--but then rocketed up over the next 8 years. Only twice, since such things have been measured, has the ratio of consumer debt been so high. The other instance was in 1929, the year of the great stock market crash, which led ultimately to the Great Depression.

Consumerism, then, might be considered the big, bad gorilla. It seems to become a problem in societies where a large percentage of the population has increasing levels of disposable income. It is quite logical, of course, that if one has more to spend then one will spend more. Then again, one could save more, instead.

Why don't people save more when they earn more? The issue, in fact, is not only one of rising incomes, but there is the pressure on the consumer that marketing brings to bear. Marketing is so rampant in modern societies that people are in a sense pressurized into buying more and more.

At some point, the marketing pressures reach such hyperbolic levels that disposable income once exhausted is quickly supplemented by credit or consumer debt.

The Nature of Consumerism

Consumerism follows an aggressive trend. If I think way back to my youth in the 1960's, the United States was, of course, already a very much consumption-driven society.

My reckoning of history tells me that it pretty much started post WWII, when the United States emerged not only from years of economic depression but became the world's leading industrial economy, practically unscathed by the devastating war and, in fact, positively energized through the experience.

Back as far as I can remember, however, people wanted things--mostly connected with home and car: a new refrigerator, a black & white or better yet color TV...

By the mid-70's the more common preference became the second TV or the second car. By the 1980's and beyond it was not only these rather nice and convenient household and transportation goods, but people began to fill their homes ever more with every manner of thing big and small.

By the 90's, when one would think there were few new avenues open for consumerism, services of every sort became the big thing. People began spending much more on eating out, grooming, those increasingly expensive cups or coffee, hotels, flights, etc.

Remembering the Time

It is that ever so aggressive trend that consumerism follows. When I think back to my early teen years in the 1970's life seemed pretty good. What more could a family need than what my family already had--a car, a color TV, the usual household appliances. But today, one of anything seems not enough.

If traveling in America over 500 miles then one feels he needs to fly. In former times most would have been content to drive, or take a bus. Clothing for children was something that was still often made at home, or if bought, handed down to siblings. Coffee was coffee was coffee--a 25 or 50 cent refillable cup!

The problem that underlies too much consumerism is, I would argue, not so much rising disposable incomes as over aggressive marketing and the relative space which people have in which to store the things they accumulate.

I lived in Japan for over a decade, during its booming years--the mid 80's to the mid 90's. The Japanese were no less bombarded with pressures to buy and spend money on goods and services than in similarly affluent America. But at the end of the day, they saved a big portion of their disposable income and bought less.

The secret of Japanese frugality was, in part, memory of the hardship that they had emerged from much more recently than had the Americans. But equally important was the fact that the Japanese lived in small houses. There was quite simply no space for a second sofa, an easy-chair or a second 29-inch TV. Closets were where beds were kept, leaving no space for overflowing consumer goods. In fact, many Japanese homes had little space for any furniture at all.

Cross borders and decades to the UAE of 2008-09. This has been a society of increasing wealth, with ever increasing pressures on the population to spend, spend and spend. The pattern of consumerism that took over 40 years to emerge in the United States has taken place rapidly here, in less than even a single decade.

Similar to Japan, however, the forces of consumerism have been held in check to some extent. More than half of the population has very little living space--from merely the space of a single bed to that of a single room. And many, in recent years, have been forced to spend 20-80 percent of their income on accommodation, as bare as it often is.

A Role for the Powers That Be

Whatever the society--Eastern or Western, developed or developing--consumerism is something that evolves and often follows a rather aggressive trend line. Left unchecked, people will easily cross the threshold of spending disposable income to funding their purchases by ever-increasing debt. I have personally witnessed this phenomenon in the USA, Japan and the UAE.

The biggest problem with consumerism, as I see it, is not capitalism per se or people's desire to obtain goods and services. The main problem is the aggressive marketing campaigns. People are bombarded with messages from every source to buy and spend.

I would argue that while governments should allow their citizens and resident population to buy and spend at will, it (the government) should play a strong role in curbing and restricting marketing.

This already happens with regard to issues of health, as in bans on cigarette and alcohol advertising. But there should also be some effort to control the extent to which advertising is allowed to proliferate overall.

The extent of advertising in publications could be restricted in any number of ways, e.g. no front or back cover adverts and adverts limited to a quarter-page size. The extent of billboards and streaming ads along the highways could be restricted, and so on.

Quite simply, if it isn't staring you in the face along every highway or every other inch of page in magazines and newspapers, the consumer will be a little less driven to part with hard-earned cash and credit facilities.

Economies develop and grow on the basis of increasing production, sales and delivery of goods and services, and marketing and advertising feed and nurture this essential economic activity--so the counter argument would go. Restrict the scope of marketing activity and you inhibit growth.

Then, let it be so! The sins and inherent danger in of over-consumption were already apparent even before the global economic meltdown. I suppose, however, that there was the somewhat credible belief that the cyclical economic corrections were sufficient to keep things in balance, negating the need to ever have a dramating day of reckoning.

The reality today, however, is that modern society will have to innovate other ways to develop and prosper, sans mass consumption.

In the end, too much consumerism is harmful to individuals, to societies-at-large and, as we can see now, to the entire global community. It is government's role at the end of the day to establish rules and frameworks that protect people and nations from destructive, and as the case may be, self-destructive activities.